"Upgrades to existing second generation (2G) mobile phone networks could make the billions spent so far on third generation (3G) UMTS licences redundant.

"Specialists insist there are alternatives to the much-hyped UMTS technology - alternatives which will support the most applications such as web browsing and email, and provide greater voice capacity.

"Derek Nicholas, from the Telecommunications Managers' Association (TMA), said: "There is the cost of 3G to consider. It will not take off if the cost of the licences falls to the consumer. It is concerning that enhancing 2G, as an alternative to third generation, could actually undermine the viability of 3G."

"Arto Karila, professor of computing at Helsinki University, agreed. He said: "The 2G network can support any additional usage such as voice and data transfers. Enhanced technologies, such as GPRS, will allow access as fast as 50 to100Kb per second, which is enough for most internet enabled applications."